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Working Paper
Financial literacy and mortgage equity withdrawals
The recent U.S. consumption boom and the subsequent surge in mortgage defaults have been linked to mortgage equity withdrawals (MEWs). MEWs are correlated with covariates consistent with a permanent income framework augmented for credit-constraints. Nevertheless, many households are financially illiterate. We assess the unexplored linkages between ?active MEW? and measures of financial literacy using panel data from the Health and Retirement Study (HRS). Findings indicate that declines in mortgage interest rates encouraged MEWs. Nevertheless, financially illiterate households were ...
Working Paper
Housing wealth and consumption
Housing wealth is about one half of household net worth, and consumption is a considerable fraction (about two thirds) of Gross Domestic Product in the United States. Empirically, movements in housing wealth are associated with movements in consumption in the same direction. This observation has led many economists, commentators and policy makers to study how housing wealth and consumption are linked together. A sizeable portion of the comovement between housing wealth and consumption reflects common factors driving both variables, rather than the "wealth effect" of the former on the ...
Working Paper
Rural wealth creation and emerging energy industries: lease and royalty payments to farm households and businesses
New technologies for accessing energy resources, changes in global energy markets, and government policies have encouraged growth in the natural gas and wind industries in the 2000s. The growth has offered new opportunities for wealth creation in many rural areas. At a local level, households who own land or mineral rights can benefit from energy development through lease and royalty payments. Using nationally-representative data on U.S. farms from 2011, we assess the consumption, investment, and wealth implications of the $2.3 billion in lease and royalty payments that energy companies paid ...